Headlines – Week of April 24, 2011

May 6, 2011

Best ‘Shrinking’ Place to Live

According to a recent article at CNNMoney.com, several U.S. cities that are losing population still make great places to live and raise a family. The city of St. Petersburg, FL makes the list at number three.

The article noted that the city was once booming but by 1980 it had been largely built-out and the population mostly stagnated, with pretty much zero population growth ever since. “St. Pete is close to some of the best beaches in the United States, and there are lots of activities, with theater downtown, plays in the park and Indy car racing.”

Here are the top four cities on the list. The others on the list include: Barnstable, MA, Wheeling, WV, Parkersburg, WV, and Battle Creek, MI.

A Wells Fargo report comparing foreclosure time frames in judicial and non-judicial states revealed some interesting nuggets. Among the 30 states with non-judicial foreclosure, the average time to foreclose fixed-rate conduit loans has increased from 6.9 months in 2008 to 11.3 months in 2010. During the same timeframe, states with judicial foreclosure periods increased from 8.7 months to 12.4 months.

To foreclose in judicial state, a lender must prove that the mortgagor (borrower/homeowner) is in default. Once the lender has exhausted its attempts to resolve the default with the homeowner, the next step is to contact an attorney to pursue court action. The attorney contacts the mortgagor to try to resolve the default. If the mortgagor is unable to pay off the default, the attorney files a lis pendens (lawsuit pending) with the court. The lis pendens gives notice to the public that a pending action has been filed against the mortgagor. The purpose of the action is to provide evidence of a default and get the court’s approval to initiate foreclosure.

Non-judicial foreclosures are based on deeds of trust that contain the power of sale clause. The clause enables the trustee to initiate a mortgage foreclosure sale without having to go to court. The trustee is typically required to issue a notice of default and notify the trustor (borrower/homeowner) accordingly about the default status. If the trustor does not respond, the trustee then initiates the steps for conducting the mortgage foreclosure sale of the home.

RealtyTrac has put together a chart which compares all state foreclosure timelines. To review this chart click HERE.

Bank’s failure sign of trouble still ahead

On April 15th, the FDIC reported that six additional banks were closed. That makes a total of 34 in 2011, compared to 50 at this point last year. The new banks seized were in Alabama, Georgia, Minnesota, and Mississippi. Five of the six banks are located in the southeast and commercial real estate loans comprise fully 75% of their non-performing loan portfolios, with construction loans being 50% of the total non-performing loan portfolios.

In addition to the above failures, the FDIC also closed another bank based in Central Florida, an indication that the state’s community banks are still reeling from the real estate slump and recession.

Winter Park-based First National Bank of Central Florida closed on April 29th by regulators.

The failure cost the Federal Deposit Insurance Corp. fund nearly $43 million, was the fourth in Florida this year – and the third in Central Florida. Orlando-based First Commercial Bank failed in January, and Sunshine State Community Bank of Port Orange in February. The fourth bank, Cortez Community in Brooksville, was closed down Friday and, like First National, acquired by Premier American.

It is expected that dozens of other troubled banks statewide could fail by year’s end according to banking consultants. They expect more failures but not as many as 2010 when 59 institutions in Florida were closed by the FDIC.

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